Enel Spa Unsp/Adr

Good evening to all the people connected. Welcome to the first half 26 result presentation. NLCO Flavio Cattaneo will open with the key highlights and our CFO Stefano De Angelis will present the economic and financial result of the period. We ask those connected to the webcast to send questions only via email at investor.relations.nl.com Before we start, let me remind you that media is listening both to the presentation and the Q&A session. Thank you. And now let me hand over to the CEO.

Thank you, Omar. Welcome, everybody. Over the past months, we have continued to deliver on the strategy presented at the Capital Market Day and our results confirm a steady execution. Indeed, in the first half, EBITDA and net income increased by 3% year-on-year, reaching respectively 11.8 and 3.9 billion, in line with our expectations. In fact, due to the contribution of our activities in Spain and Latin America, we have been able to offset the impact of the Italian energy decree, as Stefano will detail later on. The strategic turnaround has improved the quality and the visibility of our earnings, reducing our exposure to market volatility. Growth Continuous to come from stronger underlying business performance and at the same time we're moving forward with both brownfield and greenfield investment while maintaining strict financial discipline. The focus on execution drove a 5% increase in earnings per share so far at 40 euro cents. These results allow us to expect full-year EPS at the top end of our guidance range. Let me now turn to our execution and the progress of our asset turnaround. Our asset base comes from tier 1 countries and more than 90% from regulated secured business with a low risk profile. Let me now show our progress in capital allocation across both Greenfield and Brownfield investment. Greenfield investment increased by 14%, especially in Tier 1 countries. Networks remain our main focus and the strong expansion of RAB up by 4.4 billion euros year on year. Further improves visibility on future growth. In renewables, capital allocation remains disciplined, We continue to select in projects with secure earnings supported by PPAs or a solid customer base. New capacity is progressing in line with the expectations with 3 Giga currently in execution. Regarding brownfield opportunities, since the beginning of the year we have signed agreements to expand our asset base. This transaction will add 1.5 Giga of renewable capacity and 350,000 customers. In addition we are evaluating 15 giga of further opportunities out of which 15-20% in advanced stage of negotiation. Now let's move to value creation. In this month we are addressing the new phase of our strategic plan with a clear focus on growth. Our investment plan is well on track. We've continued to increase shareholder remuneration with €6.6 billion returned through dividend and share buybacks. At the same time, we maintained a comfortable net debt-to-BDA ratio at 2.6 times. Due to this, the 6% EPS growth for 2026 is already secured, without considering any contribution of further shares by back or acquisition. I now hand over to Stefano, who will give you more details on our first half results.

Thank you Flavio and good evening to all of you. I will start giving some highlights about our business results. As in the last release, we have segregated the trading and wholesale segment results, because this activity that maintains its proper relevance is now in a completely different shape when compared to the past. As you know, our focus has shifted to an energy management model where commodities contracts, trading positions and related derivatives are no longer the end game, but they are instrumental to our core business that is to build and manage power capacity, generate, distribute and sell energy and adjacent services to our final customers. 2026 is the year where this discontinuity is pivotal in the results, given the expiration of the last 2022-2023 huge position matching commodities, contracts and derivatives with our generation. This means that now we have 100% of the production potentially devoted to our final customers and the generation supply is now 100% an end-to-end integrated value chain. To be consistent when moving to the financial results and help our stakeholders to share this evolution, we will release some additional financial data about the composition of the Global Generation and Trading Unit, where the trading and wholesale results is accounted. This will not represent an adjustment of previous year results and in order to favor the best potential acknowledgement we have also eliminated any adjustment for example as we did in the first quarter so the numbers are clear. and are the same of last year, we will just segregate these trading and wholesale figures from the unit that is called Global Generation and Trading. And we will publish all the details you may need in order to better understand the presentation and the business results that we are now commenting into this new landscape. Before moving ahead in the presentation, I want to underline that in the first half the ABTDA conversion into net income reached 33% and net income share on full-year target achieved 55% of the full-year results. In terms of target, when we refer to target in this part of the presentation, we refer to the target without any potential movement from the basic figure. To give more color, more strategic overview at the business dynamics and having clarified the net of trading perimeter, I think it's better to move on page 8. Here we can appreciate how the first half delivery improved the quality and the visibility of our organic growth. First block is the distribution business that confirmed a double-digit EBITDA expansion reaching €4.8 billion and a 10% growth year-on-year, approximately €400 million. This consistent trend, boosted by a continuous expansion of CABEX and RAB, further enhanced the share of our group's margin that stood in the six months at 41%, another step up of 3 percentage points compared to last year. Second block. The generation supply business shows a very similar trend when excluding the trading world stage segment. A reshaped international portfolio is the driver of the 600 million EBITDA growth. A very positive performance if we consider the persistent headwinds like the ancillary services in Spain or their containment especially in South America. Finally, I would like to highlight the marginal exposure related to the trading and wholesale segment that accounts for just 3% of the Group's EBITDA, minus 6% when compared to last year. Let's now move into the business highlights. I start this section with the integrated margin evolution and with the geographical description of the results that I think is better considering also what we were referring about headwinds attainment in order to comment the group results. Starting from the top of the slide, we have La Damme, where the growth has been supported by the additional built capacity and by the improved hydro generation in Colombia. As I said before, we are to highlight that the persistent containment in Brazil offset and improved price scenario also in the northeast of the country where you know we have a significant portion of our capacity so it's a pretty good news. Unfortunately, the entertainment is not allowing us to take benefits in this moment of this trend in the market. In Chile, the poor hydro production in the second quarter was compensated in the first three months by the long-term gas contract optionality. In Iberia, the new integrated value chain that was introduced recently that coupling the retail volumes with renewables and nuclear production resulted into a reshaped and more profitable sourcing model based on a best-to-best flexible matching of the generation and supply profiles. And in the commercial side, We started in March with this action, exiting some well-identified and costly, also ineffective, push sales channels whose acquisition quality is not aligned with our ambition. On top of that, we have a supportive regulation of the island generation that pave the way also to future higher investment with a fair RAB remuneration. We are talking about real RAB, it's not a RAB like somebody say in the past. Finally, in Italy, the poor hydro resources availability offset the recent spot price upside. On the other hand, the retail business stabilizes its trend thanks to the increasing adoption of fixed price offering representing a mutually convenient hedging from the spot price spike. But I will comment this trend also in the following slide. I'm on page 10 of the presentation. As said before, the New Energy Model paradigm protects both sides of the value chain from exogenous and unpredictable events that turn into price volatility. In this context, fixed offerings shield both customers and suppliers, allowing for a secure sourcing cost and for a mutually fair, affordable, sustainable and secure price for the final customer. Looking at the trend of the average fixed price in the last four years, you may see that after the spike observed in 2022 and 2023, customers were repositioned, enjoying A 14% average reduction, that means a 40% reduction if we start from 2022 and we land on 2026. And the relevant portion of this reduction was sustained through the sourcing efficiencies with the matching that I'm trying to Thanks to our generation we can now maintain the price of the customers unchanged. Independently from the present, for example, short-term spike that is happening in Italy in these last three months. Why we can maintain this price? Because the sourcing is made through our generation. So for me it's important to stabilize the pricing and having a fair and mutual Benefit in terms of pricing, but especially in terms of ability to offset any potential change in the market condition. Our competitor, for example, if you look at the pricing of the recent offer, also from the more aggressive, they were around 150 euro just for the energy component. This is exactly the price that they have to pay in order to source the energy that they will sell to the fixed customers they want to acquire. I say this because what is the positive and visible return for the company? Not a spike in the margin, but A spike in the average lifetime of the contracts of the customers that increased two years from three to five years and this was the result of a dramatic reduction in the churn that moved from more than 30% in 2024 to Below 20% in the 2026 and these months. It's also continuing to improve but again this is a specific situation that we have today when we have an additional benefit when compared to the other players in the market. Let's now move to the grids. The EBITDA here reached 4.8 billion, as I said before, increasing 10% versus the same period of last year and accounting for 41% on the total of the group. If we look at the evolution for the geographies, in Italy, It's a clear example of what we consider consistent and resilient. We continue to increase the CAPEX. Now we have a single digit change, but what is really important in Italy is that we are improving strongly the RAB expansion because, as you may remember, I commented before, when you Make a mix where you eliminate, for example, the grants that clearly are positive because you have the reimbursement. You have a margin, let's say a single digit margin up to 10%. Margi, but zero of that amount move into the rub. When I move from grains into normal, let me say, capex, this make a completely different change in terms of rub, also because I already close the gap between the rub in, rub out. and talking about this is exactly what we expect to happen in Spain where we have let me say a vegetative rub in the last years you may see 11.4 11.5 11.3 now a new cycle has already started so in this quarter we do not see the benefit let me say that we expect moving forward and in this quarter We are starting this new cycle of investment but you have also to consider that what sometimes we consider one-off is not just a one-off because if you look inside the one-off you see that this one-off is related to a positive change into the regulation so you have the recovery of some In LaDame, when we see Colombia, We, let me say, are very happy to see how this country can be resilient also in terms of the grids. Brazil has been very positive because of the Tariff adjustment related to inflation. We increased the investment by 30% when compared to last year and this also has a positive benefit to the RAB. Now, what is important in Brazil is that these are, let me say, book value that are right for us. This composed the famous financial asset at the end of the concession, so it's real value, but we have to transform this value into cash in the next quarters. The REB. As you may see, we have reached approximately 50 billion. That, as we know, increases strongly the resilience and visibility of the EBITDA moving forward. And we are talking about, as you see, more than 40% of our present EBITDA. Moving into the next slide, we see that the CAPEX, that are one of the boosters of the REB of the EBITDA growth, have reached 3.5 billion. 0.6 billion in Brazil, 30% growth, 2.2 billion In Italy, the story of the investment for the resilience, the quality and the development of the network is now a four-year story. and as you may see in the right side part of the slide you see how we reach with a consistent growth in the capex the 4.5 billion that we expect for these years and what is important that in the six months with 2.2 billion of capex into the italian network we have already realized what was the average investment in the five years from 2018 to 2022. Now I'll quickly show you the EPS evolution before diving into the cash flow dynamics. The Earning Per Share Growth is supported by a sound industrial operational business with the This remarkable results in the first half represent 54% of the target for the full year and allow us to expect an earning per share for 2026 landing at 74%. Corresponding to the high end of the guidance range. Look at that evolution for 2026. It's important to underline that this result will be based From now to the end of the year, purely on organic growth, driven by the consistent delivery of our investment plan and the strategy set to enhance the value of our existing asset base. To summarize in numbers, the 2026 full-year net income expectation will also Exceed the 5% growth year-on-year set at the Capital Market Day, positioning us in the high end of the range. with the already executed share buyback for enhancing the EPS accretion by 200 basis points. This is something that you can also see today. This is a translation of the difference of the growth between net income and EPS that will be replaced in this year, 200 basis points at June, 200 basis points at December, because we are now considering a scenario where the share buyback at NSPA is what we have already realized. We are not imagining to change any of the 1.5 billion remaining but in this moment we are planning the remaining part of the year with the existing and executed the 2.0 billion of the share buyback. This means that Brownfield Contribution, and this additional share by BECC, not only at SPA, because also in these I have residual, as you can see in the annex. Programme of Share Buy Back that is part, as we stated clearly, of the Capital Market Day plan of both Endesa and Enel, that can further expand the growth potential ahead of 2026. And now, as promised before, I will move into the cash flow and net debt dynamics. The cash generation continues to be strong, with the recurring free cash flow standing at €6.1 billion, implying a cash conversion higher than 50% that is solid if we consider the seasonal dynamics on CAPEX that we The recurring cash flow generated by the business net of taxes and financial costs cover the capex of the period for 1.1 billion exceeding that are serving part of the shareholder remuneration that is compiled by 1.5 billion executed share buyback and 2.9 billion dividends. What is important in this result is that we have a significant FX impact of 1.2 billion. This is important to remind that we are not adjusting this value as it happens sometimes in other parts of Europe. We have to consider this as, technically speaking, it's called health to maturity. This 1.2 billion, that also includes the leasing, will not exist. So it means that there are temporary impacts of, especially coverage, in terms of FX and variable fixed interest rate, that As is in our history also, when we repay our debt at the maturity, this will completely disappear. So our debt, our net debt is 60 billion, this is part of the accounting routes of the IFRS, so we have informed the market that including this component, our debt is 61 billion. In this cash flow we have the first impact, let's say, the financial one of the energy degree and we have prepared in the last page of the presentation, 15, an update because we know that this is considered a really important item. So we have put into this slide the slide of the capital market day, that we spent all the night preparing for the market and the update regarding the part of the grid that is already clear and active. If we start from the ETS offset, as underlined in the energy degrees, this measure is provided for 2027, so the impact on 2036 will have been zero in any case. As you probably know, currently there are analyses ongoing at EU and national level to define the measure that will not The final goal is to smooth the energy price in Italy also for the ETS component. What is important to keep in mind is that in our plan assumption We have already embedded a severe potential impact of the energy degree. If you remember, it was 3 cents in the EPS only related to these items. It was the first block of the bridge. The measure related to the early payment of system charges was expected, as you may see in the comparison between the Capital Market Day presentation and the actuals, at 800 million. The effective unbalance, as you may see, is higher at 1.2 billion. This is not because we made a mistake in the cash flow, but because in the transformation, the degree to low, there was added the component of the ASOS, the so-called ASOS, that is the system charges collected to support renewables. Finally, the IRAP has projected and expected impact for 0.1 billion approximately, both on debt and on the reported net income. For next year, regarding these items that are referred more to the financial side of the measures, we expect to have a total impact on the debt ranging from 1.6 to 1.8 billion, because the system charges do not depend just by the number of customers and so on, they depend also by the movement that we have in the component of the price that is not defined by us but by the regulatory watchdog. So this will be composed by the 800 million that we already projected, the 400 million that are two years, 2026 and 2027, of the additional two percentage points on the ERAP, the regional taxes, and the grid block is what we may expect, that at the moment is 400 million, We have made, let me say, a range coming from a potential change of the other system charges that are now in June representing the 1.2 billion impact that I have already commented. What is important is to clarify two points. These impacts are on the stock of the debt and are, let me say, a one-off because they are not a recurring cash flow impact. This means that our free cash flow in 2027 will not be affected by 1.2 impact of the system charges advance payment because this happened just one time in the first year of adoption. Next year, we will have an higher debt of 1.2 billion, but the cash flow will be not affected by this movement because we will anticipate the payment in 2026 or 2027. So in 2027, we will have the benefit of not having to pay two times the charges coming to the final photography of the impact. Second, this impact of 1.6 do not include any about the 2027 measures that are the recurring one because they, in the intention of the measure, will impact the Thank you very much. Any doubt in your comprehension of the energy degree at this moment? So I can now hand over to the CEO for some closing remarks.

Thank you, Stefano. Let's move to the closing remarks. As I said before, our results are solid and supported by strong underlying business performance and high quality earnings mix. Financial flexibility continues to support growth and allow us to capture additional value accretive brownfield opportunities. The quality and visibility of our results allow us to expect a full year 26 EPS at the top end of our guidance range. Thank you for your attention and let's now open the Q&A session.

We thank you our CEO. Let's now open the Q&A session. We receive a lot of questions we summarize by topic. Let's start with the most strategic question that will be answered by our CEO. The first one, let's start with concession. What's the latest news on the concession renewal of hydro and distribution networks?

Well, in Italy the distribution concession process is clearly defined by the law. The process is moving forward and we have no particular concern. Regarding Hydro, we simply need to wait for the appropriate time. I'd like to remind you the spike of our hydro concession will be in 2029 and for give you an example the currently action for the other operators are ongoing on micro concession expired 10 years ago.

Thank you. Let's move to Brazil. Could you please provide us color on the process for São Paulo concession and your view on Brazil in general?

Ok, well, over the past year we have significantly improved our service quality indicators defined by the local authority, ANEL, passing from 31st in December 2023 to 7th ranking in May 26th. We've delivered on every commitment defined by the Brazilian government. We have proposed two solutions to solve the blackout problem. Underground the cables or allow more extensive tree trimming. In Sa Paolo, cables run through the trees and the local rules don't allow us to trim more than 25% of the existing trees. That is not enough. At the same time, the issue is political. Brazil has been in a continuous election cycle. Local election last year, presidential election this year, and this situation affects the process, of course. We remain in close dialogue with the Brazilian government. Take in mind the local authority is involved only as advisor of minister. Moreover, the process refers only to the concession and not to the San Paolo company. It's important to underline two concepts. First, our RAB is fully protected. Second, you have to consider the value of the company not included in the RAB. And we are talking about assets such as software, equipment, backup generators, inventories, spare parts in a big, big numbers. At the same time, we continue discussion with the local authority. Moreover, as recently highlighted by the government, there is also an issue on Brazilian credibility for international investment. We remain confident. A balanced solution is achievable. Our objectives remain the same. A fair outcome for all parties. Simple.

Thank you. Let's move now to profit opportunities. Can you give us some color on the timeline and the size of the deal you are evaluating?

As I said before, about 15 Giga on Brownfield assets are currently on the market. We can secure around 15 to 20% of this pipeline. Brownfield, in every meeting, also in our Capital Market Day, we said is an important driver for growth. Over the past year we've delivered on every commitment we made. We intend to do exactly the same on M&A, remaining disciplined.

Thank you. Shared buyback. Enel shared buyback has been approved for 1.5 billion. Any detail on the timing?

The buyback is well on track. We've already completed part of the program, not all. The remaining portion will be executed based on market conditions as previously communicated.

Thank you. Going back to Italy. Given the recent evolution of the discussion on energy prices in Italy and the energy decree, could you please share your view?

The public debate often creates a misunderstanding between the wholesale and the retail price. The two aren't the same. The final monthly bill for residential customers is broadly in line with the European level, as reported by Eurostat for 2025. We are an integrated operator. We generate electricity and supply it directly to our customers. Most of our residential customers are on fixed price contracts. They aren't affected by short-term movement in wholesale electricity prices. The fixed offers are the umbrella for market volatility and international price shocks while maintaining stable our marginality. And this is the deal.

Thank you. Let's now move to question for the CFO. Stefano, working capital deterioration from first quarter. What is expected level for year-end?

As always, the change of the working capital in the first nine months, let's say in this way, the first, the second, and the third quarter, reflects the typical seasonal trends that we observe every year in this part of the release, mainly associated with the dynamics on capital expanding and inventories. To make a long story short, we often answer this question and each of the previous three years, working capital normalized in Q4 as promised by the company. So, not to say that Thank you Stefano. Can you provide us the expected moving parts to get to your net debt for 2026? Yes, let's make it very simple. I will have 15 billion, so you have the final figure from the CFO, 15 billion approximately of regarding FFO. This means 9 billion more of the first half. That is more or less in line with last year, if you remember we have 14.8 and at this stage we have We will expect to spend 7 billion, then there is a moving part of 1 billion approximately that is represented by the first impact of the growth acceleration of the leverage because if the timing will be confirmed we will start to have in the last months of the fourth quarter probably the first closing of the brownfield acquisition and we are talking about 1.5 billion dollars. This will not have an impact on the economic results, let's say, In the stock of the DEB and in the CAPEX flow we will have probably 1.5 billion related to the already released and signed Brownfield operation. So 13 billion of Let's suppose 13 billion to 13.5 billion of CapEx. We will again have 1.5 billion of positive FFO minus CapEx. What is easy is that in the second part of the year we will have the same amount of shareholder remuneration but with 500 million that move from one block to another. We will have more dividends and less share buyback. So instead of having 1.5 billion of share buyback, we will have one expected share buyback not regarding NRSPAE and two 0.8 dividend payments. The portion of this has already been paid by us in this month. What we have on top of this We can say almost nothing. The FX impact may, we are not, in this bridge, I'm not considering any change, let's say, so we have the negative impact. If you start from June, you may use the 60 billion or the 61 as you prefer, but the net cash flow will be, I repeat, 15 billion approximately of FFO, 13, 14 billion of CAPEX, 4.5 billion of dividends and we have the reversal of the hybrid bonds because we will have if you consider if you start from the from June you have to consider that in June we have a positive impact on the hybrid of approximately 7-800 million because of the timing difference of the Issue of the new bond and the repayments of the previous emission at maturity. So this accounts for approximately 800 million. I will not make the sum so you can enjoy, but we are talking about something that if you look at the FX, including the FX impact, is in the range of 64-65 billion debt. More than this, I don't know what to... Thank you, Stefano. And don't ask me about the EBITDA bridge because...

Right, that is a nice question. So now let's move to EBITDA. Can you provide the building blocks to bridge your EBITDA target by region?

But the BTA is easier because, I'm not joking, the utility should have, let me say, more or less the same amount of BTA. We have some seasonality effects in the power, you know, that the second quarter, for example, is very good. But if I tell you that we will have the same dynamics in the second part of the year, This is exactly what we expect to happen, especially if you look at the first half and the second half. Then if you look at 2025, you may have some impact related to Marginal, let's say, one-off that I don't consider one-off, that are seasonal accounting items that if I ever, let me say, an agreement with the authority that enter 100 million per year and I account one year in the third quarter and one year in the fourth quarter, you will have a difference in analyzing the by-quarter results. What we see that Italy is... We are totally resilient now also in the commercial side. I will answer also the question about the hydro in Italy probably because we are already accounted in my projection that we will not have the same water condition that we have for example two years ago but we expect to have a 2027 that will restart from a normalized position. These are the weather. In Spain, we will have A very positive second half, different from what somebody expected, because, as I say, it's not just one-off. Clear, in some of the items, for example, the one-off of the previous year agreement for the islands cannot be, let me say, double, but if you take the BTDA of the first half and you multiply for two, The figure that we expect is not far from this value because the portion of the one-off may be offset by the growth of the operating business portfolio. In LATAM, we expect a recovery from Chile and Brazil in the integrated margin because the performance was not so good due to weather, hydro, The market scenario is very supportive in this. Colombia, we will continue to be resilient in the second half. Argentina, who knows, but we have a very important discussion about the recognition of Some components related to the previous agreement we made on the debt and the receivables that are with the local authority and with the government for what we have not been paid in the last three years. So this could be a very important topic in the fourth quarter. What else? Networks, as I said before, I already tell you the number in the first quarter release and I confirm that number maybe some 100 more or it was 9.6, 9.7, if I'm not wrong.

9.6, 9.7.

Add 100 million in this range, so let's say 9.6, 9.8, so you have a midpoint that increased something. In order to take account also of the partial one-off that we have observed, Part of this in the first quarter was not... So, again, as of the FAFO, you can now not call the investor relations department because you have all the information you may need. That's right.

I think also we covered all the questions regarding the Hydro.

You have to consider in the Hydro that the diversification impact that the rating agencies love, We have diversified into countries that are tier 1 or tier 2 at maximum. For example, we have in Europe one of the worst reserves in Italy and we have one probably the best here in the last 10 in Spain. So what is good of being big and diversified also geographically? You did it is that you can compensate the some negatives temporary effects with the positive ones.

Thank you Stefano. Now let's move to regulation of this one. WAC reset for Italy is expected by Lorenzo. Which is the level of WAC expected at the moment?

But this question, you know that we are Italian, so we don't love to talk about something that may happen or not, depending also on something that do not depend on us. Last year, for example, everybody was already considering a 30 basis point reduction. Nothing happened because the inflection that was used. arrived to a figure that was for one basis point in the range. At this moment, you know that the 13 basis point is again the central scenario, but this year we may have some good news coming from the spread. The scenario I have to tell you that is a calculation, is 30 basis points more or less, so we are again in the borderline. What is important that the figure I've already listed more than 100 million, you know that we have always a plan and we never put the figure that the maximum one potential when it's positive and we consider the maximum one potential when it's negative in order to prepare the recovery plan. So we have some inflation positive recovery in the OPEX etc. so the impact will not be tribal number in terms of Euro. If this happens, we are talking about something that is more or less in the half of what I have listed, about 120 million, something like this. So it doesn't change the history of the network at Enel in Italy, because as you see, the opportunity that we have in terms of RAB expansion and additional cabex, Return is something that will not make us change the trajectory for 30 basis point of walk.

Now let's talk about retail. Are you concerned about Italian retail business? Could competition erode margins or lead to customer losses? Do you see any risk for regulatory intervention?

The risk of regulatory intervention is always there, but let me say what is important in retail is that it's very easy to check What are the price positions of the different players? From March to April, Enel is the most competitive player in the market because this was also a choice that we made in order to secure and to reduce the charnel. Thank you very much. The small business customers that we have not in the condition to source in Italy with our energy. You probably remember my bridge when I say the big business to consumer customer. We have the profile and the shape of the consumption of the customers that change this base of the approach we have in the past and this is a cost. Now that the churn has reduced, I have some Thank you very much. I'm not safe and I don't have my buffer as the hydro that was in the past sold without having the still the the weather projection in this sense we do not have any negative impact in this year for buying back the the energy that we have already sold at the lower price but coming back to the to the retail Again, the spread is not so high as you can imagine and the recent price move of our competitors is really important to understand what is the spread. Then you have to consider that there is a cost to serve. When you are a company like Enel, you have a cost to serve that is higher than The digital player is higher than the newcomers, but where we compete is not just the price but is the multi-bundle offer, it's the loyalty programs, it's the customer care that we have that is different. You see that the basic offer of one of the most famous digital players is that after one year You move into an indexed offer that today means more than 200 euro. This is the basic one. We do not have this price, the contractual provision in any of our contract because our interest is to maintain the customers into the fixed offer price that we have decided based on the industrial cost of our production. Again, the price will be reduced in the future, yes, probably yes, because the marginal price has to be the price that equals the LCOE of the marginal technology. that will not be in the next three years the nuclear that is more than 150 euro but we have something that as I said sometimes before also in the presentation that is to disintermediate the wholesale spot price and we have the opportunity to match the generation and demand profiles that allow a reduction of the Cost of sourcing of the customers and the negative spread that you have when you have to inject in the network energy at lunchtime that is in Italy, I remember, the highest hourly price that you have in the offer of all the competitors because in the past the pricing was following the consumption. When you charge a car in Spain In the meantime, you pay more than 400 euros per megawatt because of the cost of the value chain. That energy is paid into the wholesale market zero, 10 euros. Between 300 and 10, there is all the opportunity to have a fair price for the final customers and an optimization of the generation fleet from the Producer. This is called flexibility and this will be the future that we are already starting to implement at Enel.

Thank you Stefano for the analysis. Let me double check if there is some more questions. And last one. Share buyback at subsidiary level, what's the strategic rationale?

Why? The strategy relational is that we have a company that have, let me say, a net financial position, a financial leverage that is not optimized, and we have the opportunity to make investment, industrial investment, buying back part of our invested capital. Clearly, the price has to be fair, but if I look at what we have already realized, at Enel we have 8.7 by back average price, but at Endesa we have 30 euros, so we are more than 30% discount or return, as you prefer, compared to the price. Consider that also 40 euro is not the fair value of the company because you have a lot of resources there that in the future may be used to create more value. You know that they have some renewables and nuclear, they have more than double the energy that we generate in Italy, excluding the thermal. They have the network that is, in terms of growth, becoming a new phase. But again, in Enel Americas, we are confident of the Brazilian concession resolution. We buy back the share with a multiple of 3.5. We consider this a very... And America has just one debt that we repay in the forthcoming months, that is the $600 million bond. So remember that when we realized the first buyback, they have a net financial position that was positive, already paying an extraordinary dividend. So we have also to look at this part of the...

Thank you for the clarification. There are no more questions, so the Q&A session is over. We cover all the main topics. If something is missing, the IR team is available for follow-ups after the call. Thanks to everybody. Thank you and see you soon. Bye bye.